Advantages of NPV capital budgeting method Advantages of NPV capital budgeting method: A. Incorporates time value of money B. Focuses on total incremental shareholder wealth increase C. No arbitrary p

Under CAPM formula, required return = Risk-free rate + β× Under CAPM formula, required return = Risk-free rate + β×? A. Market risk premium B. Company specific default premium C.

Operating leverage is driven by: Operating leverage is driven by: A. Fixed operating cost proportion in cost structure B. Fixed financial interest expense C. Variable raw material unit price D. Income

Preferred stock feature different from common stock: Preferred stock feature different from common stock: A. Fixed predetermined dividend priority before common shareholder B. Voting right for board d

Working capital management core target: Working capital management core target: A. Balance liquidity & profitability of short-term capital B. Maximize long-term fixed asset investment scale C. Inc

Hedging main purpose: Hedging main purpose: A. Eliminate underlying asset’s price fluctuation risk B. Maximize speculative investment profit C. Reduce corporate income tax payable D. Improve inv

Market beta(β)=1 indicates asset’s systematic risk: Market beta(β)=1 indicates asset’s systematic risk: A. Higher than overall market average risk B. Equal to market portfolio av

Higher financial leverage means higher: Higher financial leverage means higher: A. Fixed interest financing expense risk B. Variable production cost fluctuation C. Raw material purchase volatility D.

Which capital budgeting method considers time value of money Which capital budgeting method considers time value of money? A. Payback period B. Discounted cash flow NPV C. Accounting rate of return(AR

Current ratio = Current Asset ÷? Current ratio = Current Asset ÷? A. Total Liability B. Current Liability C. Total Equity D. Long-term debt Answer: B Rationale: Classic short-term liquid

Coefficient of correlation(r) value range: Coefficient of correlation(r) value range: A. 0~+1 B. -1 ~ +1 C. 0~∞ D. -∞~+∞ Answer: B Rationale: r=+1 full positive correlation; r=-1 ful

Project relevant cash flow excludes: Project relevant cash flow excludes: A. Initial equipment outlay B. Annual incremental operating cash inflow C. Historical R&D sunk cost before project approva

Capital structure trade-off theory balances: Capital structure trade-off theory balances: A. Tax shield benefit of debt vs financial distress bankruptcy cost B. Fixed cost vs variable cost proportion

Transfer pricing primary management objective: Transfer pricing primary management objective: A. Minimize global corporate income tax arbitrarily B. Measure divisional performance & align subunit

Quick ratio belongs to which category of financial ratio Quick ratio belongs to which category of financial ratio? A. Profitability ratio B. Liquidity ratio C. Leverage solvency ratio D. Activity turn

Protective covenant in bond indenture restricts issuer’s: Protective covenant in bond indenture restricts issuer’s: A. Major asset acquisition/disposal without creditor consent B. Daily op

EVA (Economic Value Added) measures shareholder value by deducting EVA (Economic Value Added) measures shareholder value by deducting: A. Total operating expense only B. Cost of invested capital from

Zero-based budgeting core characteristics: Zero-based budgeting core characteristics: A. Every expense item needs annual reasonableness justification B. Not based on previous fiscal year’s budge

Key risk reduction internal control activities: Key risk reduction internal control activities: A. Segregation of incompatible duties B. Regular physical inventory count C. Independent account reconci

Flexible budget variance splits into: Flexible budget variance splits into: A. Price/spending variance B. Efficiency/usage variance C. Static budget planning variance D. Market share variance Answer:

Common types of responsibility center include Common types of responsibility center include: A. Cost center B. Revenue center C. Profit center D. Investment center Answer: ABCD Rationale: Four classic

Items affect breakeven sales volume calculation: Items affect breakeven sales volume calculation: A. Unit selling price B. Unit variable cost C. Total fixed cost D. Actual sales quantity of prior year

Which costs are period cost under GAAP absorption costing Which costs are period cost under GAAP absorption costing? A. Fixed selling expense B. Variable sales commission C. Factory equipment deprecia

Under IMA ethics standard, first step solving ethical conflict: Under IMA ethics standard, first step solving ethical conflict: A. Report directly to external regulator immediately B. Review company&r

Internal control cost-benefit principle means: Internal control cost-benefit principle means: A. Control expense shall not exceed expected loss reduction benefit B. All control procedure must maximize